Economy shrank by 0.1 per cent in run-up to Budget, data reveals

The UK economy contracted by 0.1 per cent in October as consumers held back before the Autumn Budget, while the JLR shutdown continued to impact on business.

The surprise fall in gross domestic product (GDP) - a measure of economic output - comes after a similar unexpected 0.1 per cent drop in September and 0 per cent growth in August.

Economists had predicted that October GDP would grow by 0.1 per cent.

UK GDP has been hit hard by the JLR cyber-attack which led to a shutdown through parts of August and September.

The Office for National Statistics also said that during October, the UK's services sector fell by 0.3 per cent, while construction was down 0.6 per cent. However, production grew by 1.1 per cent.

Figures show that GDP on a rolling three-month basis, to October, also fell by 0.1 per cent.

Ruth Fleet (pictured), senior policy advisor at the GBCC, said: “We continue to see a notable impact on GDP from the JLR cyber-attack and shutdown through the end of August and beginning of September, as well as a knock-on effect in services related to the automotive industry.

“October data won’t yet show the full impact of the phased reopening of JLR, so it is anticipated that the November data will offer an improved picture on the production front. 

“However, it is also concerning that services output has slowed so substantially in the last three months, largely down to a reduction in professional, scientific and R&D.

“Throughout the Autumn many businesses reported concerns around the impending Autumn Budget and the Employment Rights Bill, which is currently being amended in the House of Lords.

“Both of these have caused hesitancy and concern for businesses, with many holding back on recruitment and investment decisions until there was a clearer picture from government on what to expect.  

“While it is positive that businesses were not targeted for any major tax hikes in the Budget, there is not yet a clear narrative of how the government plans to drive economic growth and Greater Birmingham Chambers of Commerce will continue to push for that. 

“The launch of the Birmingham Economic Review 2025 last week also showed that Greater Birmingham is well-positioned to embrace and drive economic growth in the near and longer-term future.”